KEY TAKEAWAYS
Negative interest rates are an unconventional, and seemingly counterintuitive, monetary policy tool.
Central banks impose the drastic measure of negative interest rates when they fear their national economies are slipping into a deflationary spiral, in which there is no spending—and hence, dropping prices, no profits, and no growth.
With negative interest rates, cash deposited at a bank yields a storage charge, rather than the opportunity to earn interest income; the idea is to incentivize loaning and spending, rather than saving and hoarding.
In recent years, several European and Asian central banks have imposed negative interest rates on commercial banks.
In harsh economic times, people and businesses tend to hold on to their cash while they wait for the economy to improve. But this behavior can weaken the economy further, as a lack of spending causes further job losses, lowers profits, and prices to drop—all of which reinforces people’s fears, giving them even more incentive to hoard. As spending slows even more, prices drop again, creating another incentive for people to wait as prices fall further. And so on.
https://www.investopedia.com/articles/investing/070915/how-negative-interest-rates-work.asp
Ok...now I see what’s going on and why he wants them. He is anticipating a way to slow start to the economy. These governors with their phase in approaches and the “team” he has assembled are wanting to take things way too slowly for his liking. Thus causing a deflationary spiral...which essentially has already started as thousands of small businesses are already gone forever in less than 54 days.
With so many businesses opening at 10-40% capacity and the looming food crisis...we’re already in a deflationary spiral ...one that our government created.
So, we pull our savings out of the bank, stuff it in 5e mattress, and guard it with the 12 gauge?
LOL, I am a relative ignoramus on these things, so I am bowing out of this discussion!
I only became interested in passing on this subject when the stimulus bill had a component in there for electronic currency proposals, and a follow up discussion on this.
I am already out of my depth!